Not in the US ... Depositors have $250,000 of insurance - per account.

Right, Jeremy. . . until the FDIC goes broke. Then the Fed will fire up the printing presses and cover the losses with funny money. Don't believe a politician when he tells you he's going to give you a free lunch. There just ain't no sich a thang.

Why it's different is that it isn't simply a corporate entity that goes down if the bank goes down: it's the guy whose money was sitting there until it wasn't any longer who goes down with the bank.

Can you imagine the scenes in the UK if the Bank of Scotland, Northern Rock, Royal Bank of Scotland etc. suddenly couldn't pay out their customers anymore? Everything would stop, go into reverse, and the only survivors would be those chaps with the private sub-machine guns. Starvation and crime would kill the country in less than a week. That's the part that few seem to think about in the context of bank bail-outs. I suspect there's very little governmental/business love in the act.

Rob C

It's not the private account holders that are the problem though Rob, it's the builders, developers and speculators who were carelessly lent billions to build, develop and speculate with that have caused the misery. Money was lent against fairy tale valuations of property with French and German banks in particular opening the sluices and letting the money roar into the country without regard to any banking practices let alone best ones. When the music stopped the government simply turned round and guaranteed these gamblers billions using money they imagined could be raised from the taxpayer and the EU. If it was just a case of a few folk living too high on the never never then we could deal with it but they are only a fraction of the story.

Right, Jeremy. . . until the FDIC goes broke. Then the Fed will fire up the printing presses and cover the losses with funny money. Don't believe a politician when he tells you he's going to give you a free lunch. There just ain't no sich a thang.

Sorry, Russ ... but your grasp of macroeconomics is poor at best and you always descend into these political polemics that never get past the TV talking points ...

Back in the real world, FDIC insurance is real and does prevent the overwhelming majority of normal depositors from being exposed to business continuity risk.

Of course, if the entire banking system collapses, we're all fucked ... but ... duh.

Yes, I know about the so-called bank guarantees; the thing is, when the insurance groups and the governments and all the collected money boys discover their own accounts are void, then the shit hits the fan and the guarantees are meaningless. Printing paper has never solved a thing - you need only look at the 30s to find examples and even more recently you need just look at the funny numbers associated with the lira and the peseta. As far as memory serves, the lira was once around 2,400 to the pound sterling and the peseta fluctuated at around a million of them for five grand sterling. Those numbers didn't get that astronmical by accident. (Let's not even mention parts of Africa and Latin America.)

That was not long before the Euro came bouncing and skipping along, holding its skirts up around its fanny in an attempt to seduce the European politicians. Usually, that seems to work, but as often with seductions, the ride don't come for free.

That was not long before the Euro came bouncing and skipping along, holding its skirts up around its fanny in an attempt to seduce the European politicians. Usually, that seems to work, but as often with seductions, the ride don't come for free.

Back in the real world, FDIC insurance is real and does prevent the overwhelming majority of normal depositors from being exposed to business continuity risk.

I redacted part of your original message to prevent further embarrassment to you, Jeremy.

Yes, FDIC insurance is real, and it does let banks take outrageous risks (otherwise known as bets) secure in the knowledge that if they go under the feds will bail out their customers. But the FDIC's Deposit Insurance Fund is supposed to depend on bank assessments to exist. When the fund runs dry as a result of too many and/or too big bank failures the FDIC has to go to Congress and ask for a taxpayer bailout. I'm sure you're going to tell me that future bank assessments will then make the taxpayers whole, but, as you say, if the whole banking system collapses we're in deep doo-doo. Unfortunately as the situation gets worse, before the banking system fails it's going to go to Congress for a bailout. Then, too-big-to-fail will take over the whole economy and a huge inflation will ensue. How much exposure do you think our banking system has to Greece? Spain? Ireland? For that matter, France? I think we're about to find out. And when the boom comes down what do you think those exposed banks are going to do?

By the way, I also think the good old USA will survive all this. After all, we survived the Jimmy Carter inflationary years. It just takes a president and a congress willing to ride out the recession brought on by the things they need to do to get the inflation under control.

Nobody seems to learn anything from history, though, and we keep having to repeat it.

Right, Jeremy. . . until the FDIC goes broke. Then the Fed will fire up the printing presses and cover the losses with funny money. Don't believe a politician when he tells you he's going to give you a free lunch. There just ain't no sich a thang.

Do you know how to tell when a politician is lying? His/her lips are moving.

Nobody seems to learn anything from history, though, and we keep having to repeat it.

Unquote

Correct. The crises in capitalism will keep recurring as long as it exists because it is fundamentally flawed. The next crisis will be in about 10 years time going by history. An American bank has got it's self into bother in the last month despite all the assurances that the banks have learned their lesson.

You know, on first looking, it was all about sex appeal. Then it became something else.

Thereís a song within the C&W genre that has the line I like my women a little on the trashy side. Yes, some if not all contemporary songstresses certainly subscribe to the canon of trash, but even though they do manage an animal sexuality, for the most part thatís fairly limited in its effect, in that it seldom rises above the waist. (The effect, that is. Anything else would just be exaggeration and worthy of disbelief.)

Now, take our French lady, and you have sex appeal in abundance but also something else: sophistication. Thatís another of those things you just canít buy. You can drown a tramp in Rive Gauche and many a one has perished in Versace Ė unsurprisingly Ė but as with her married, Italian predecessor Carla, the right lady in the right clothes can be amazing. I remember watching, spellbound, some year or two ago when Carla Bruni appeared at a reception in London with all the rest of the International great and good: she floored them by doing nothing, just standing there. It was enough! (Compare with yesterday's Jane Fonda - oh dear!)

So yes, the new top lady of France is worth the looking. They have something special, some of those continentals. Iím sure Fred has seen something similar in Madrid.

Thanks for the link: itís made me go and prepare another mug of coffee which Iím now sipping.

Correct. The crises in capitalism will keep recurring as long as it exists because it is fundamentally flawed. The next crisis will be in about 10 years time going by history. An American bank has got it's self into bother in the last month despite all the assurances that the banks have learned their lesson.

Capitalism isn't a great system, no doubt about that. The problem is that nobody has come up with anything better.

Actually I think the fundamental flaw in capitalism as it's now practiced is its commitment to infinite growth, which is a physical impossibility in a finite world. We may or may not be bumping into the limits of growth now, but we're bound to bump into them sooner or later.

Capitalism isn't a great system, no doubt about that. The problem is that nobody has come up with anything better.

Actually I think the fundamental flaw in capitalism as it's now practiced is its commitment to infinite growth, which is a physical impossibility in a finite world. We may or may not be bumping into the limits of growth now, but we're bound to bump into them sooner or later.

That, Chris, has been my thinking for many years. I would have been more than happy to have stayed on my good years' earnings without any rise at all. I see no logic to this quest for growth every year: I believe that it simply upsets people by creating an atmosphere of fear and a pressure that is ultimately unbearable to man or company. It fuels inflationary wage demands which, in truth, can be understood as a means of standing still. As anyone can see, the more money in the system then the higher prices will be pushed in order to take a larger share of that available money. Also, the unfairness where a corner shop can't buy from a manufacturer at a price that a supermarket can sell the same product to the public should be stopped. Big companies should certainly be allowed to sell cheaply, but only from cost-cutting that comes from their internal advantages of scale, not from their muscle in buying cheaply. That's just gangsterism, bully-boy tactics.

The funny thing is that I keep hearing economists telling us that we need population growth to help the economy grow. Are we now to supposed to think that we need economic growth because the population is growing?

I also never said that economic growth is a bad thing. It's undoubtedly a good thing in poorer countries, and brings at least some benefits in rich ones. The problem is that economic growth requires inputs (energy, minerals, land, etc.) and produces waste which must somehow be disposed of. In a finite world, further growth (in the real amount of goods and services being produced) cannot go on forever.

Our current dependence on fossil fuels is obviously unsustainable, because they will run out rather soon (especially if poor countries become better off) even if you ignore the environmental effects of using them. I sincerely hope that we can switch to something sustainable without serious disruption. I like air travel and automobiles as much as the next person.

You folks ought to stick to talking about photography ... finance and economics are clearly not your strong suit.

Ever heard about birth control?

Experts in "finance and economics" have brought us to the pond of shit above which we are currently suspended or even partially immersed. A pox upon your experts! They all need a strong purgative of common bloody sense or, better, total half-baptism in that pond alluded to earlier on.